Knowing When to Sell a Mutual Fund

While health care mutual funds had a rough 2016 compared to other category averages, health care still remains the top-performing category over the last five years. Health care funds retained four of the 10 top positions in AAII’s updated Top Funds Over Five Years list, but lost some ground compared to last year’s list, when seven of the top 10 were health care funds.

AAII’s founder, Jim Cloonan, has been repositioning the AAII Model Fund Portfolio to make it more aggressive to attempt to take advantage of intermediate-term market trends. Since its inception, the Model Fund Portfolio has done only slightly better than the market. If a portfolio is to be active, it should pursue a policy that will lead to results that are noticeably better than the market. Toward that end, one mutual fund and one exchange-traded fund (ETF) have been sold from the Model Fund Portfolio and two sector ETFs have been purchased.

Google Sheets is an online cloud-based service that allows users to create, edit and collaborate on spreadsheets online and offline. This article illustrates how investors can use the Google Finance capabilities within Google Sheets to access mutual fund data. Google Finance is a function within Google Sheets that retrieves current or historical security information. Mutual fund prices are provided by Morningstar and mutual fund data is delayed to end of day.

Many people hop in and out of investments all too frequently. That’s due in part to the fact that mutual fund advice and information are so freely available that individuals are often persuaded to switch from their more prosaic funds to those that have been delivering more exciting short-term returns. At the opposite extreme, others take the attitude that once bought, mutual funds can practically be held for a lifetime. That can be true in some instances, but it’s often not—you must rethink your portfolio periodically. What are the legitimate reasons for selling funds, and when should you stay put?

Health care sector funds, on average, have been the top-performing funds over the last several years. Which sector do you think will perform best over the next five years?

Vote to answer this week’s Special Question: What criteria do you use to decide when it is time to sell a mutual fund?

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How do you go about rebalancing your investment portfolio?

AAII Mutual Fund Classroom: Mutual Fund Investing Articles

If you’re contemplating investing in mutual funds, you’ll want to arm yourself with some basic information. This AAII Investor Classroom, one of the many benefits of an AAII membership, gives you all the tools you need to get started. The topics covered include how to break a tie between two funds, what to look for when reading a mutual fund statement, how to research mutual funds and much more.